Reynolds to Auction Hollywood Memorabilia

Debbie Reynolds may have won a victory in bankruptcy court this week. But that doesn’t mean that the actress’s long-held dream of opening up a museum to showcase her Hollywood memorabilia collection will come true.

The Tennessee entertainment development that Reynolds’ Hollywood Motion Picture and Television Museum was supposed to anchor is up for sale, as Bankruptcy Beat reported this week, after a would-be developer failed to secure financing. The museum’s fate depended upon getting a $4 million advance from that potential developer this summer. If it did, it would have been able to pay its creditors from the proceeds of its eventual operations. If it didn’t, it would be forced to liquidate the collection (which boasts everything from Marilyn Monroe’s white “subway grate” dress to the white tuxedo Tom Hanks donned in the movie “Big”) and use the proceeds to pay off its debts.

That either-or scenario formed the basis of the Chapter 11 plan that a California bankruptcy judge confirmed this week. Court records show the judge picked that plan over a rival plan from lender Gregory Orman. Orman, whose litigation to collect on a note he accused the museum of defaulting on spurred the museum’s bankruptcy filing last summer, had proposed selling only enough of the collection to cover creditor claims. He would have left it to the auctioneer to choose which pieces were sold.

The liquidation scenario laid out in the museum’s Chapter 11 plan calls on a “nationally recognized auction house,” like Christie’s, Julien’s Auctions, Sotheby’s or Profiles in History, to sell off at least $5 million worth of memorabilia in auctions spaced at least six months apart. Orman will receive the first cut until his $2.4 million promissory note is paid off in full, with interest. Remaining creditors will get their payment according to their rank on the Bankruptcy Code’s priority scale. The plan allows the museum to at any time sell all or a portion of the collection directly to a third-party buyer.

Todd Fisher, Reynolds’s son and the museum’s president, told the Knoxville News Sentinel Thursday that the museum would seek to hire Christie’s to hold the first auction by June.

He added that his mother was heartbroken over the fate of her collection, which she began amassing several decades ago as giant film studios started getting rid of the costumes, props and the other items that the “Singin’ In The Rain” actress couldn’t bear see laid to waste.

“Most people collect for themselves…but she collected for the public,” he said. “She collected for all of us. She collected for the American people to preserve the history of their industry.”

About Bankruptcy Beat

From Dow Jones Daily Bankruptcy Review, exclusive coverage of corporate bankruptcies, companies headed for trouble and the latest trends in bankruptcy law, distressed investing and corporate restructuring. Lead writer Pat Fitzgerald and Daily Bankruptcy Review reporters in Washington, New York and Wilmington, Del., provide insight into the big cases, who’s next to fall and what’s making news across the bankruptcy market.